sr-121410-3g (2)City of ' I'
Santa Monica
City Council Meeting: December 14, 2010
Agenda Item: J?
To: Mayor and City Council
From: Andy Agle, Director of Housing and Economic Development
Subject: Tax-Exempt Bonds for High Place West Affordable Housing
Recommended Action
Staff recommends that the City Council adopt a resolution approving the issuance of
tax-exempt bonds by the California Statewide Communities Development Authority
(CSCDA) to assist in the financing of 47 affordable apartments at 1942-1954 High
Place and 2345- 2349 Virginia Avenue (High Place West).
Executive Summary
As of February 2009, High Place West has received all of its entitlements for the
development of 47 affordable residences with public and private financing. One of the
sources of funding tax-exempt bonds requires City Council approval of the issuance,
although the City will neither issue the bonds nor be responsible for their repayment.
Tax-exempt bonds offer lower interest rates compared to regular bank loans, thus
providing cost savings and increased leveraging of City housing trust funds.
Background
High Place West comprises almost one acre of land and will provide 47 apartments
affordable to low-income households. High Place West is part of a larger development
that also includes High Place East, an affordable condominium development with 45
residences: The Statement of Official Action for the projects was approved by the
Planning Commission on December 12, 2007.
Community Corporation of Santa Monica (CCSM), the developer, and staff have
identified tax-exempt bonds as an appropriate financing mechanism for High Place
West. Tax-exempt bond financing requires an allocation of bond authority from the
State of California's Debt Limit Allocation Committee (CDLAC). Such allocations of
authority are obtained through a competitive application process. Additionally, the
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federal Tax Equity and Fiscal Responsibility Act (TEFRA) requires that the public be
afforded an opportunity to comment on the issuance of tax-exempt bonds, and that the
local legislative body (City Council) approve the issuance of bonds for a development
located in its jurisdiction.
Discussion
The City of Santa Monica will not issue the bonds for High Place West, and neither the
City of Santa Monica nor its residents will be responsible for repayment of the bonds.
Instead, with City Council approval, CSCDA will issue the bonds.
Established in 1987 as a California Joint Powers Authority, CSCDA is a public agency
jointly sponsored by the League of California Cities and the California State Association
of Counties. It offers a broad range of tax-exempt financing programs to assist local
agencies in achieving economic, financial, and social goals. CSCDA takes
responsibility for reviewing proposed bond financing, ensuring that the proposed
financing meets all CSCDA guidelines, ensuring the development satisfies the public
benefit requirements for tax-exempt bonds, and recommending the development for
bond allocation by CDLAC.
The repayment of bonds will be the stile obligation of High Place West. The sources of
repayment are private investor equity from the sale of federal low-income housing tax
credits, loan proceeds from aloes-interest loan from the California Department of
Housing and Community Development's Multifamily Housing Program (MHP), and a
housing trust fund loan from the Redevelopment Agency of the City of Santa Monica.
The total development cost for High Place West is projected to be approximately $23.5
million. The attached resolution authorizes up to $15 million of tax-exempt bonds.
CCSM anticipates submitting an application to CDLAC in early 2011 seeking tax-
exempt bond financing authority for the project. Most of the bond financing would serve
as short-term construction financing, with approximately $1.3 million serving as
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permanent financing. This financing structure also facilitates an award of federal low-
income housing tax credits conditioned upon issuance of the tax-exempt bonds. The
tax credits are sold to a professional investor and the proceeds of the sale of the credits
will be used to provide funding to construct the development and to repay the
construction portion of the tax-exempt bond.
Financial Impacts & Budget Actions
City approval of the issuance of bonds by CSCDA for this development has no financial
or budgetary impact.
Prepared by: Ava Lee, Senior Development Analyst
Andy Agle, Director (J
Housing and Economic Development
Forwarded to Council:
~x~~-~ ~~
Rod Gould,
City Manager
Attachment A: Resolution Approving the Issuance of Bonds by CSCDA for the
Purpose of Financing a Multifamily Affordable Housing Development
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Reference Resolution No.
10549 (CCS).